DTN Closing Grain Comments

Mild USDA Report, Big Response in Wheat

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN illustration by Nick Scalise)

General Comments:

Corn was up 10 1/4 cents in the July contract and up 10 cents in the December. Soybeans were up 1/4 cent in the July contract and up 3/4 cent in the November. Wheat closed up 20 cents in the July Chicago contract, up 18 3/4 cents in the July Kansas City, and up 2 3/4 cents in the July Minneapolis contract. The June U.S. dollar index is up 0.33 at 93.89. August gold is down $4.20 at $1,299.00 while July silver is down 10 cents and July copper is down $0.0130. The Dow Jones Industrial Average is down 52 points at 25,270. July crude oil is up $0.22 at $66.32. July heating oil is down $0.0030 while July RBOB gasoline is down $0.0189 and July natural gas is down $0.012.

Corn:

July corn closed up 10 1/4 cents at $3.77 3/4 Tuesday, erasing Monday's loss with help from lower ending stocks estimates from USDA for both U.S. and world totals. USDA reduced its estimate of 2018-19 U.S. ending corn stocks from 1.682 billion to 1.577 billion bushels, thanks to a 75 million bushel increase in the old-crop export estimate and a 50 million bushel increase in the new-crop estimate of ethanol demand. USDA's estimate of world ending stocks was dropped from 159.15 mmt to 154.69 mmt (6.1 bb), thanks to a 2 mmt drop in the estimate of Brazil's current corn crop and an unexpected drop of 4 mmt in the new-crop corn estimate for the Former Soviet Union. Here in the U.S., USDA said late Monday that 77% of corn was rated good to excellent, down a point from last week, but still the highest rating since 2007. Tuesday's seven-day forecast expects moderate to heavy rain in the northern states, but has lighter totals expected for the rest of the Corn Belt. USDA's higher export estimate on Tuesday seems too optimistic, but USDA did say earlier Tuesday that 6.0 million bushels (152,000 mt) of U.S. corn were sold to Mexico, 4.5 million bushels (114,000 mt) of which were for 2017-18. In spite of Tuesday's bounce higher, the trends remain down for both, old-crop and new-crop corn and are keeping stress on noncommercials caught heavily long. DTN's National Corn Index closed at $3.36 Monday, down sharply from its highest price in 23 months and 31 cents below the July contract. In outside markets, the June U.S. dollar index is trading up 0.33 as many expect the Federal Reserve to raise the federal funds rate a quarter-percent on Wednesday. Outside commodities are mixed.

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Soybeans:

July soybeans closed up a quarter cent at $9.54, helped by USDA's lower-than-expected ending stocks estimate from USDA. USDA reduced its estimate of 2018-19 U.S. ending soybean stocks from 415 million to 385 million bushels, thanks to a total of 30 million bushels of increased crush expected in the old- and new-crop seasons. Meanwhile, USDA's export estimate was kept at 2.065 billion bushels for the current season. USDA's estimate of world ending soybean stocks for 2018-19 was increased slightly, from 86.70 mmt to 87.02 mmt (3.2 bb). The old-crop estimate for Brazil's harvested soybean crop was increased from 117.0 mmt to 119.0 mmt (4.37 bb) while Argentina's soybean estimate was reduced from 39.0 mmt to 37.0 mmt (1.36 bb) -- a wash as far as world totals went. Late Monday, USDA said 93% of soybeans were planted and 83% were emerged, ahead of their usual paces; 74% of soybeans were rated good-to-excellent, down one point from last week and the same rating it had in 2016 at this time. Technically, last week's lower closes turned the trends lower for both old-crop and new-crop soybeans and also saw the bullish inverse disappear from the Nov/Mar spread. DTN's National Soybean Index closed at $8.89 Monday, priced 65 cents below the July contract and getting close to its lowest price in 2018.

Wheat:

July Chicago wheat closed up 20 cents and July K.C. wheat was up 18 3/4 cents at $5.53 1/2 Tuesday as concerns about Russia's production took on new importance. USDA's numbers were actually bearish for wheat Tuesday with the estimate of 2018-19 world ending wheat stocks increasing from 264.33 mmt to 266.16 mmt (9.78 bb). Within the data however, Russia's wheat crop estimate was reduced from 72.0 mmt to 68.5 mmt (2.52 bb) while the estimate for Ukraine stayed the same. The new-crop estimate of U.S. wheat production was increased slightly, to 1.827 bb, which is still more than a year ago in spite of this year's drought in the southwestern Plains. The hard red winter wheat crop was estimated at 650 mb, down 100 mb from a year ago. The 2018-19 estimate of U.S. ending wheat stocks was trimmed from 955 mb to 946 mb, a little less than expected, but still a lot of wheat. Late Monday, USDA had said 14% of U.S. winter wheat was harvested with drought-stricken crops coming off the fields quickly in Texas and Oklahoma; 47% of winter wheat in Kansas was rated either poor or very poor. Spring wheat crops continue to do well with 70% rated good to excellent. The only trouble spot is in Idaho where 12% of the crop is rated poor or very poor. Technically, the trends remain up for Chicago and K.C. wheats and may be up for another challenge of last months' highs. The seasonal high for winter wheat prices typically arrives around early July, making this a suspicious time for wheats' uptrends. DTN's National SRW Index closed at $4.88 Monday, down from its highest price in ten months and 26 cents below the July contract. DTN's National HRW Index closed at $5.18, near its highest price in over two years.

Todd Hultman can be reached at todd.hultman@dtn.com

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman